Publication 575: Pension and Annuity Income; Publication 575 Introductory Material

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Table of Contents

Important Reminders

Required distributions. The rules for calculating required distributions have been simplified. See Required distributions under Tax on Excess Accumulation.

Rollovers to and from qualified retirement plans. For rollover purposes, tax-sheltered annuity plans (403(b) plans) and eligible state or local government section 457 deferred compensation plans are qualified retirement plans. See Rollovers.

Hardship distribution rollovers. A hardship distribution from any retirement plan is not an eligible rollover distribution. See Rollovers.

Rollover by surviving spouse. You may be able to roll over a distribution you receive as the surviving spouse of a deceased employee into a qualified retirement plan or a traditional IRA. See Rollovers.

Eligible rollover distribution. You may be able to roll over the nontaxable part of a retirement plan distribution to another qualified retirement plan or a traditional IRA. See Rollovers.

Section 457 plan early distributions. The tax on early distributions may apply to certain distributions made from an eligible state or local government section 457 deferred compensation plan. See Tax on Early Distributions.

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Introduction

This publication discusses the tax treatment of distributions you receive from pension and annuity plans and also shows you how to report the income on your federal income tax return. How these distributions are taxed depends on whether they are periodic payments (amounts received as an annuity) that are paid at regular intervals over several years or nonperiodic payments (amounts not received as an annuity).

What is covered in this publication?

Publication 575 contains information that you need to understand the following topics.

How to figure the tax-free part of periodic payments under a pension or annuity plan, including using a simple worksheet for payments under a qualified plan.
How to figure the tax-free part of nonperiodic payments from qualified and nonqualified plans, and how to use the optional methods to figure the tax on lump-sum distributions from pension, stock bonus, and profit-sharing plans.
How to roll over certain distributions from a retirement plan into another retirement plan or IRA.
How to report disability payments, and how beneficiaries and survivors of employees and retirees must report benefits paid to them.
When additional taxes on certain distributions may apply (including the tax on early distributions and the tax on excess accumulation).

For additional information on how to report pension or annuity payments on your federal income tax return, be sure to review the instructions on the back of Copies B and C of the Form 1099–R that you received and the instructions for lines 16a and 16b of Form 1040 (lines 12a and 12b of Form 1040A).

A “corrected” Form 1099–R replaces the corresponding original Form 1099–R. Make sure you use the amounts shown on the corrected 1099–R when reporting information on your tax return.

What is not covered in this publication?

The following topics are not discussed in this publication.

The General Rule. This is the method generally used to determine the tax treatment of pension and annuity income from nonqualified plans (including commercial annuities). For a qualified plan, you generally cannot use the General Rule unless your annuity starting date is before November 19, 1996. Although this publication will help you determine whether you can use the General Rule, it will not help you use it to determine the tax treatment of your pension or annuity income. For more information on the General Rule, see Publication 939, General Rule for Pensions and Annuities.
Individual retirement arrangements (IRAs). Information on the tax treatment of amounts you receive from an IRA is in Publication 590, Individual Retirement Arrangements (IRAs).
Civil service retirement benefits. If you are retired from the federal government (either regular or disability retirement) or are the survivor or beneficiary of a federal employee or retiree who died, get Publication 721, Tax Guide to U.S. Civil Service Retirement Benefits. Publication 721 covers the tax treatment of federal retirement benefits, primarily those paid under the Civil Service Retirement System (CSRS) or the Federal Employees' Retirement System (FERS). It also covers benefits paid from the Thrift Savings Plan (TSP).
Social security and equivalent tier 1 railroad retirement benefits. For information about the tax treatment of these benefits, see Publication 915, Social Security and Equivalent Railroad Retirement Benefits. However, this publication (575) covers the tax treatment of nonequivalent tier 1 railroad retirement benefits, tier 2 benefits, vested dual benefits, and supplemental annuity benefits paid by the U.S. Railroad Retirement Board.
Tax-sheltered annuity plans (403(b) plans). If you work for a public school or certain tax-exempt organizations, you may be eligible to participate in a 403(b) retirement plan offered by your employer. Although this publication covers the treatment of benefits under 403(b) plans, it does not cover other tax provisions that apply to these plans. For more information on 403(b) plans, see Publication 571, Tax-Sheltered Annuity Plans (403(b) Plans).

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Publication 575Introductory Material

Important Reminders

Introduction

Useful Items - You may want to see:

Publication 575
Introductory Material